Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd

Court of Appeal (NSW)|2015-11-26|Before: Bathurst CJ, Ward JA, Bergin CJ, Rein J

Background

Polo is a company which was established in 2006 to promote the sport of polo in Australia. Pinctada is a company that is involved in the hospitality industry in Broome.
The dispute between the parties relates to the arrangements pursuant to which Polo and Pinctada together conducted a beach polo event on Cable Beach in Broome in 2011 (they having jointly staged such an event the year before in accordance with what was then only an informal agreement in place between them).
After the 2010 beach polo event, Polo and Pinctada entered into a joint venture agreement on 28 March 2011 (the Joint Venture Agreement) to reduce to writing the terms of what they described as their unincorporated joint venture (defined as the "Joint Venture") for the conduct of the "Beach Polo" event (defined as the "Event") to be staged in Broome between 8 and 15 May 2011 (recital A). Recital B to the Joint Venture Agreement recorded that the agreement set out "all the terms and conditions governing the operation and conduct of the Joint Venture". The Joint Venture Agreement was governed by the law of Western Australia. It is not suggested that anything turns for present purposes on the parties' choice of the governing law for their agreement.
Pursuant to cl 1.1 of the Joint Venture Agreement, it was to commence on the date of execution and to conclude on 12am, 30 June 2011 (unless terminated earlier in accordance with the provisions of clause 18, which conferred a right of termination in certain events). Relevantly, for present purposes, cll 1.2-1.5 dealt with the circumstances in which the term of the Joint Venture Agreement might be extended to 2015 (cl 1.2) or otherwise "revived" (cll 1.3-1.5).

Equity Division Proceedings

On 26 October 2012, Pembroke J ordered, pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that the question whether Polo was entitled to the relief sought in orders 1 and 2 of its summons (i.e., the permanent injunctive relief sought in relation to the staging of a beach polo event in 2013) be determined separately from other questions in the proceedings.
Prior to the hearing of the separate question, Polo filed an amended summons dated 15 November 2012, amending the terms in which the injunctive relief it was seeking was framed. Nothing turns on those amendments. Relevantly, what was still being sought in the amended summons was a final injunction to restrain the holding of a beach polo event in 2013 as well as unquantified damages against Pinctada for breach of the Joint Venture Agreement.
The alleged breach was elucidated in Polo's statement of claim filed 1 November 2012. There, no claim was made for breaches of the kind in respect of which Polo's cl 1.3 notice had been said to be without prejudice. Rather, Polo pleaded the breach (and proposed breach) of the following alleged terms of the Joint Venture Agreement: 6. It was an express term, or alternatively an implied term, of the 2011 JV [Joint Venture] Agreement that a party who failed to exercise the option referred to in clauses 1.3 and 1.4 would not be at liberty to conduct the Event in the year to which the option related (the Restraint term). Particulars This was the effect of clause 1.6 or alternatively an implied term necessary to give business efficacy to clauses 1.3 to 1.6. 7. It was an implied term of the 2011 JV Agreement that, in the event that a party became obliged to give notice under clauses 1.3 and 1.4, that party was not entitled to conduct the Event in the subsequent year without either (a) giving notice under those clauses or (b) accepting an option offered by the other party under those clauses (the Notice term). Particulars This term was implied to give business efficacy to clauses 1.3 to 1.6.
The separate question was determined in favour of the respondents by Bergin CJ in Eq on 10 December 2012. Her Honour did not accept that the "restraint term" pleaded at [6] of the statement of claim was an express term of the Joint Venture Agreement, noting that it would have to be implied from the use of the words "at liberty" in cl 1.6 and in the context of the whole of the Joint Venture Agreement but in particular cl 1 ([57]). Nor did her Honour accept that the classic test (set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266) for the implication of a contractual term to the effect pleaded was satisfied, this not being a term so obvious as to go without saying and not being necessary for the business efficacy of the agreement ([58]).
Her Honour considered that if a restraint as contended for by Polo had been intended, it was reasonable to expect that the parties would have included an express provision in which they stated their consent and in respect of which they acknowledged its reasonableness ([59]) (as was the case with the restraint provisions contained in cl 20). Her Honour was not satisfied that cl 1.6 of the agreement could be construed as an express or implied restraint as pleaded in the statement of claim ([61]).
At [60], her Honour said that she was satisfied that the parties did not intend the outcome that she considered would flow from Polo's construction of the agreement (that being the very outcome which Polo had itself asserted in June 2012), namely, that Pinctada could never stage the event again because Polo had the exclusive right to do so for "any subsequent years".
Following the dismissal of [1] and [2] of the amended summons, the proceedings nevertheless remained on foot (there being an extant claim in the amended summons, as against Pinctada, for damages for breach of the Joint Venture Agreement); as well as the claim made in the November 2012 statement of claim, as against both Pinctada and Cable Beach Polo, for damages and indemnity under ss 236 and 237 of the Australian Consumer Law by reference to alleged misleading or deceptive conduct in contravention of that legislation.
In the period from December 2012 to June 2015, steps were taken to progress the matter to hearing. For example, as noted by Polo in the context of its explanation for the delay in seeking to appeal from her Honour's decision, a proposed amended statement of claim was served in March 2013 (including new claims concerning Pinctada's accounting for the 2010 and 2011 events); particulars were requested and provided of that proposed amended statement of claim; the amended statement of claim ultimately was filed by consent on 17 May 2013; a request for further particulars of the amended statement of claim was then made and complied with; and, on 28 October 2013, Polo was granted leave to file a further amended statement of claim, amending the relief claimed to include relief in respect of the accounting claims for the 2010 and 2011 events and amending the particulars of the claim for damages for breach of contract (at [24]) to include loss of the opportunity to conduct "Consecutive Events" (my emphasis).
Pinctada filed defences to the amended and further amended statements of claim, in July and December 2013 respectively, raising (at [24A]) an allegation of repudiation of the 2011 Joint Venture Agreement, disputing the entitlement of Polo to give the cl 1.3 notice in April 2013, and a defence of estoppel in relation to the 2011 accounting claim (but not in relation to the claims made for breach of the Joint Venture Agreement). It was not until the hearing in June 2015 that Polo indicated that the repudiation defence was not pressed.
The parties agreed to an order for discovery on 10 February 2014. There were then disputes as to the ambit of the discovery sought by Polo. In particular, Pinctada objected to the production of certain categories of documents, including those relating to potential income and expenses for the proposed staging of the event in 2013 to 2017, on the basis that production would be onerous (not, as Polo points out, that the documents were not relevant). Polo notes that in the course of those discovery disputes both Pinctada's solicitor and Ms Paspaley swore affidavits referring to the hearing before Bergin CJ in Eq as "interim".
A second further amended statement of claim was filed on 1 June 2015, by leave of the Court. The relevant terms of the Joint Venture Agreement remained as earlier pleaded in [6] and [7]. The claim for damages for breach of contract was pleaded at [24] as including continuing damage if the defendants were not restrained from conducting "the 2013 Event or Consecutive Events". (By this time, a beach polo event had been held at Cable Beach by Cable Beach Polo without Polo's participation in each of 2013, 2014 and 2015.)
The question of issue estoppel in relation to the breach of contract claims that depended on the construction of cll 1.3-1.6 was first flagged when Pinctada's written submissions were served on 10 June 2015.
At the hearing before Rein J, Senior Counsel for Polo accepted that the effect of Bergin CJ in Eq's decision was an issue that had to be determined (though pointing to the need for there to be leave to amend the defence to plead an issue estoppel). Addressing that requirement, an amended defence was subsequently verified on behalf of Pinctada on 16 June 2015 in which it was pleaded that the parties were bound by the determination of Bergin CJ in Eq and that Polo was estopped from alleging that either of the terms pleaded at [6] and [7] was a term of the Joint Venture Agreement.
Rein J determined the issue as to the issue estoppel first, it being indicated by Polo in the course of argument that in the event of that issue being determined against Polo a stay would then be sought to permit an appeal on that issue. Senior Counsel for Polo also indicated at that time that if the contract claim was not available to Polo it would not conduct a hearing on the remainder of the causes pleaded.
His Honour concluded that Polo was not entitled to run its case for breach of contract based on non-compliance of cll 1.3-1.6 of the Joint Venture Agreement as that issue had already been determined by Bergin CJ in Eq, her Honour having held that Pinctada was not in breach of the Joint Venture Agreement by applying for and obtaining the right to carry out the 2013 beach polo event.
Following Rein J's decision, the parties agreed orders by consent pursuant to which Polo's claims in respect of misleading and deceptive conduct were dismissed and its new contract claims were to await the outcome of an application for leave and appeal from the judgment of Bergin CJ in Eq but would be dismissed if that application for leave or appeal was unsuccessful.

Proposed Grounds of Appeal

The proposed appeal grounds are contained in Polo's draft notice of appeal, as follows: Bergin CJ in Eq's judgment dated 10 December 2012 1. The learned trial judge erred in finding that Clause 1.6 of the 2011 Joint Venture Agreement did not have the effect of restraining a party who failed to exercise the option referred to in clauses 1.3 and 1.4 2. Her Honour erred in finding that it was not an implied term of the 2011 Joint Venture [Agreement] that in these circumstances the Respondents were obliged to give notice under clauses 1.3 and 1.4 of the JVA [Joint Venture Agreement] and they were not entitled to conduct the Event in the subsequent year or years without either (a) giving notice under those clauses or (b) accepting an option offered by the other party under those clauses. Rein J's judgment dated 16 June 2015 3. His Honour erred in finding that the judgment of Bergin CJ in Equity dated 10 December 2012 finally determined the appellant's right to claim damages for breach of the 2011 Joint Venture [A]greement.
The orders sought in the draft notice of appeal include the setting aside of the orders of both the primary judges (notwithstanding that a number of the orders of Rein J were, as already noted, by consent); a declaration that the proper construction of cll 1.3-1.6 of the Joint Venture Agreement is as set out below; and the remittal of the matter to be heard with respect to the issue of damages for breaches of cll 1.3 and 1.4 of the Joint Venture Agreement, and [34]-[44] of the second further amended statement of claim; as well as for costs. The proper construction of the relevant clauses of the Joint Venture Agreement, for which a declaration is sought, is set out in [5] of the prayers for relief as being that: a. A party who failed to exercise the option referred to in clauses 1.3 and 1.4 would not be at liberty to conduct the Event in the year to which the option related; and b. It was an implied term of the 2011 JV Agreement that in these circumstances the Respondents became obliged to give notice under clauses 1.3 and 1.4 and they were not entitled to conduct the Event in the subsequent year(s) without either (a) giving notice under those clauses or (b) accepting an option offered by the other party under those clauses.

Leave

I propose to deal first with the question of leave.
Leave is necessary for an appeal from a decision in proceedings in the Supreme Court of any question or issue ordered to be determined separately from any other question or issue (s 103 of the Supreme Court Act 1970 (NSW)). The fact that the determination of the separate question was a final decision does not, as Polo has in its written submissions suggested, gainsay the requirement for such leave. It should have been apparent to those acting for Polo in December 2012 that leave was necessary in order to appeal from the decision of Bergin CJ in Eq and that there was a specified time within which such an application was required under the rules to be made. That time has long since expired and hence not only is leave required for the appeal to be brought against her Honour's decision but Polo also requires an extension of time for the bringing of the leave application.
Similarly, leave is necessary to appeal both from an interlocutory decision, as was the procedural ruling of Rein J on the question of issue estoppel (s 101(2)(e) Supreme Court Act), and from a judgment or order made in proceedings with the consent of the parties. Hence, leave is necessary for Polo to appeal from the decision of Rein J, even though it led to the summary dismissal of the proceedings. No extension of time is required in that regard.
I also note that leave is required to appeal from a final judgment or order in proceedings where the matter in issue is less than $100,000 (s 101(2)(r) Supreme Court Act). At the hearing before Rein J, there was discussion as to the quantum in issue in the proceedings. Reference was made to an expert report that was said to be available (and to which there was objection by Pinctada) but it does not appear that it was tendered, presumably because the matter was dealt with on the discrete issue as to whether there was an issue estoppel binding Polo.
His Honour was informed from the bar table that for the years 2014 to 2017, Polo claimed an entitlement to about $100,000 each year (as a half share presumably of the profits or potential profits of the successive yearly events). No figure seems to have been given for 2013. The half-share figure to which Polo claimed to be entitled for 2010 was again around $100,000; that for 2011 about $65,000. On that rough indication, if the only arguable breach of contract claim by Polo were, say, to a claim for damages for the loss of the opportunity to participate in the 2013 year alone, then the claim would appear to be one that was very close to, if not less than, the $100,000 monetary threshold (leaving aside interest). While Polo contends that it is entitled to much more than that, it is something to bear in mind when considering whether this is a matter that warrants leave.
In determining whether to grant an extension of time to bring an appeal, the Court considers the length of delay; any explanation for the delay; whether the applicant for leave has a fairly arguable case; and the extent of any prejudice suffered by the respondent to the application (Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [55]).
In determining whether leave to appeal should be granted, however, something more must be demonstrated than that the decision was arguably wrong. What is ordinarily required to be demonstrated is that the matter involves a question of principle or of public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable. (See Clarke v State of New South Wales [2015] NSWCA 27; Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69; Jaycar Pty Limited v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164.) Where a disproportionate amount of time and cost will be involved, that is a factor tending against the grant of leave to appeal, particularly having regard to the case management principles enshrined in the Civil Procedure Act 2005 (NSW).
On the application for leave to appeal, Polo relies on an affidavit sworn 1 October 2015 by Mr John Gazecki, a director of Polo. Mr Gazecki deposes that, from 10 December 2012, Polo intended to appeal from her Honour's decision but was waiting for the final hearing of the matter before bringing the appeal ([5]). He deposes that he believed that, as the injunction and costs orders were interlocutory, and as the proceedings below were continuing, Polo would require leave to appeal from her Honour's judgment (a belief that was correct in the sense that leave was required but incorrect in the misunderstanding as to the final nature of a determination of a separate question under r 28.2 UCPR).
Mr Gazecki goes on to depose that Polo was focussed on seeking damages for breach of the Joint Venture Agreement which he says was the subject of the final hearing ([6]).
Mr Gazecki then gives evidence as to the steps taken in relation to the proceedings after her Honour's judgment and annexes correspondence passing between the parties, including a letter dated 8 February 2013 which Pinctada's lawyers sent to Polo's then solicitors stating, among other things: Because, the claim for damages for breach of contract depended on the claimed expressed and implied terms (which Bergin CJ in Eq found did not exist), and the other part of the Australian Consumer Law claim was also based on those terms, PEA [Polo] has lost on those parts of its claim, which leaves only the Australian Consumer Law claim based on the other matters in paragraphs 25b and 28 …
Pinctada's lawyers there expressed the view that the remaining claims were hopeless and invited Polo's consent to the dismissal of the proceedings with no order as to costs. That invitation was declined. Polo's solicitors maintained that the claim for breach of contract was distinct from the claim her Honour had determined and that the claim was breached on failure to provide the first right of refusal pursuant to cl 1.4 of the contract which had deprived Polo of the opportunity to stage the 2013 event. It was said that as there was no dispute that Pinctada had failed to offer the first right of refusal, and the only matter remaining for the Court in that regard to determine would be the quantum of damages.
It is submitted for Polo that the delay from December 2012 until June 2015 was because both parties had proceeded on the basis that the hearing and judgment of her Honour was interlocutory. That apparently mistaken view of the finality of her Honour's determination (seemingly not shared by Pinctada at least as at the time of its 8 February 2013 letter) does not change the fact that a forensic decision was made by Polo not to seek leave to appeal from her Honour's decision insofar as its focus was on the final hearing and it decided to wait until then to make any such application.
Pinctada's lawyers (as noted above) had expressed the view soon after the December 2012 judgment that the claims for breach of contract depended on the pleaded terms that her Honour had found did not exist. Polo did not agree. It cannot fairly be suggested that, by not pressing its view at that stage and by then engaging in the preparation for the hearing of the remaining claims, Pinctada in some way induced Polo not to proceed with an application for leave to appeal at an earlier time. Rather, the position was that there was a forensic decision made by Polo (which had the benefit of legal advice at all relevant times) to concentrate on the final hearing in the proceedings and not to seek leave to appeal from the December decision until after the final hearing had concluded (apparently on the mistaken belief that leave would not then be necessary to appeal from her Honour's decision, assuming that the outcome of the final hearing was not favourable to Polo).
Pinctada submits that this case does not raise a point of principle requiring consideration by this Court since the question on appeal is limited to the operation of one particular contract between the parties, whose joint venture has now broken down, and no issues of general importance arise. I agree.
Pinctada also submits that the continued dispute between the parties should not be allowed to drag on further, noting that in addition to the Court proceedings in this state there have been other proceedings brought by Polo in Western Australia (in the State Administrative Tribunal) in relation to the Council's approval of Cable Beach Polo's application (to which reference was made in Pinctada's defence in relation to the misleading and deceptive conduct allegations at [32] of the amended statement of claim). It is a matter of public record that there have also been proceedings in the Supreme Court of Western Australia in relation to the Tribunal's dismissal of Polo's application.
Polo's delay in seeking leave to appeal from the decision of Bergin CJ in Eq, coupled with the fact that no point of principle or general importance in the proposed appeal is raised, points to the refusal of leave to appeal from that decision. That is fortified by the view I have reached, for the reasons I set out below, that the only aspect on which there may be an argument as to her Honour's construction of the Joint Venture Agreement relates to the question whether cl 1.6 of the Joint Venture Agreement should be read as giving to Polo, in the events which happened, an exclusive right to stage the beach polo event in 2013 (not in any subsequent years) particularly since the basis on which there might be such an argument was not one particularised in the pleading nor does it seem clearly to have been put to her Honour and was only raised on the application for leave to appeal following comments from the bench. Rather, the case, as particularised, seems to have been put squarely on the basis that any implied term was one that arose as a matter of business efficacy.
If any damages were to be limited to the loss of opportunity to conduct the event in 2013 alone, then there is every prospect that a disproportionate amount of costs and time will be expended in now revisiting that issue; particularly since Pinctada's position is that if the matter were to be remitted then it would press its defence as to any restraint of the kind for which Polo contends being unenforceable under the relevant legislation relating to restraints of trade in Western Australia.
I would therefore refuse the application for leave to appeal from her Honour's determination of the separate question.
As to Rein J's decision, in my opinion the ground of appeal raised in relation to this decision is hopeless. There is no arguable error in his Honour's application of the principles of issue estoppel on the facts of this case. Moreover, the orders sought to be set aside are consent orders. Leave to appeal from that decision should also be refused.

Construction of the Joint Venture Agreement

To explain why it is that I have concluded that her Honour's construction of the relevant provisions of the Joint Venture Agreement could not be said to be arguably wrong except perhaps (and even then only on a basis seemingly not argued before her Honour) in relation to its operation for the 2013 event, it is necessary to consider the text of cl 1 of the Joint Venture Agreement, which I have set out earlier in these reasons.
Clearly, as her Honour found (at [44]), cl 1.2 amounted to a conditional agreement to negotiate in good faith an extension of the Joint Venture Agreement to 2015, the condition to which the agreement to negotiate was subject being uncertain (since it depended on the "outcome" of the 2011 event). No complaint was made by Polo as to any breach of cl 1.2; nor was there complaint as to her Honour's construction of the clause.
The process then provided for in cll 1.3-1.5 was directed at what might be described as an ad hoc extension (there referred to as a revival) of the Joint Venture Agreement for a particular event. Her Honour was satisfied that the words "[n]otwithstanding clause 1.2 above" at the commencement of cl 1.3 were used because the parties intended that they could proceed to stage another beach polo event in joint venture together notwithstanding that they had not completed their good faith negotiations to extend the term of the Joint Venture Agreement to 2015 or notwithstanding that they had decided not to extend the term of the agreement to 2015 ([45]). There is no suggestion that this was an incorrect construction of the opening words of cl 1.3.
At [47], her Honour concluded that the word "exclusive" in the expression "exclusive first right of refusal" in cl 1.3 was probably superfluous and considered that what was to be offered under cl 1.3 was the opportunity to conduct a consecutive event in accordance with the same or substantially the same terms as the Joint Venture Agreement and that the requirement to make that offer to the other party (before staging the event on its own or offering the opportunity to anyone else) provided the parties with the security that neither could stage a consecutive event without the other party before the other party had the opportunity to take up "the option" of staging the event in joint venture.
Polo places some weight on the words "the exclusive first right of refusal" in cl 1.3 and argues that her Honour was incorrect in treating "exclusive" as superfluous.
Polo argues that the meaning to be given to "exclusive" in cl 1.3 should match or reflect that which is found in cl 1.6 (i.e., the liberty, if the option is not exercised, to conduct the event "independently, or with such other parties as it deems appropriate"). As I understand it, the work said to be performed by "exclusive" is thus to make clear that the option to be offered was an option to "go forward ... with each other alone, and to the exclusion of others" (my emphasis). Even assuming that to be the objective meaning of "exclusive" in cl 1.3, it does not shed light on what is meant by the "liberty" provided for in cl 1.6. Indeed, on one view, it supports the construction for which Pinctada contends, i.e., that cl 1.6 is confirmatory in its operation, insofar as it may be read as making clear that the option (on this hypothesis being to conduct a consecutive event jointly and exclusively, in the sense of to the exclusion of any other parties) having been refused, it is open to the party who offered the option to proceed as it wishes in the future (and, to use a colloquial expression, that thereafter all bets are off).
At [48], her Honour accepted that the expression "consecutive Event"" evidenced the parties' intention that the mechanism was to apply if either party wished to stage another event subsequent to the 2011 Event but that this did not mean the event had to be staged annually; rather, the use of the expression "in the subsequent year, or years" accommodated the prospect that the event might be staged after 18 months or two years or more but that it would be the next one in a series following the 2011 event. No complaint is made as to this construction of those words.
Her Honour having observed (at [40]) that the real issue was whether cl 1.6 conferred an exclusive right, was of the opinion (at [54]) that had the parties intended that the party who made the unaccepted offer of the first right of refusal would have a "right" or an "exclusive right" to conduct the consecutive event, it was probable that such an expression would have been used in cl 1.6. Her Honour pointed to the added difficulty that the "liberty" in cl 1.6 applies to the event not only in "that year", meaning the year the subject of the offer of the first right of refusal, but also "any subsequent years". Her Honour (at [55]) noted the concession by Senior Counsel then appearing for Polo that the expression "and any subsequent years" in cl 1.6 presented difficulties for Polo's construction and had suggested that the parties really intended that the "liberty" only applied to the event in the year that was the subject of the offer of the first right of refusal. Her Honour did not accept that submission (which, I note, would render the words "and any subsequent years" meaningless).
Her Honour concluded (at [56]) that the concept of being "at liberty", in the context in which that expression was used in cl 1.6, meant that Polo was free to proceed in 2013 and subsequent years without having to be in a joint venture with Pinctada.
Polo emphasises in this Court that cll 1.3-1.6 require both parties to offer the other the opportunity of being involved in future Broome beach polo events. That is clearly the case. However, Polo goes on to argue that, having refused the option offered in 2012, Pinctada is not "at liberty" to conduct a beach polo event at least up until 2015 unless Pinctada gives a subsequent cl 1.3 notice that Polo rejects. (The concession that the restraint would operate only until 2015, inconsistent with the damages claim to 2017, is made by reference in cl 1 to the possible extension of the agreement only until 2015.)
That submission fails adequately to take into account the concluding words of cl 1.6 (which it was accepted in argument both before her Honour and in this Court point against Polo's construction).
Once the option procedure has been invoked by a party (here, Polo) and the other party has not taken up the offer (or, in the terminology of the clause, has failed to "exercise" the option) then not only does cl 1.6 provide that the party who made the offer be "at liberty to conduct the Event in that year and any subsequent years" (my emphasis) but the clause goes on to provide that the terms of cl 1.3-1.6 "will cease to bind either party" (again, my emphasis).
The concluding words of cl 1.6 can only be read as having the effect that, at most, (assuming its construction of the clause were otherwise correct) Polo would have had the exclusive right to conduct the event in the 2013 year because thereafter, on the express words of the clause, the first right of refusal procedure would cease to apply. There can be no basis for suggesting that "either party" means only the party (here Polo) which offered the unaccepted option. Thus there is no basis on which the notice term (pleaded at [7]) can be implied, as this would be inconsistent with the express terms of cl 1.6. That effectively disposes of Polo's case for breach based on the term pleaded at [7].
If the concluding words of cl 1.6 are to be given effect, on no view could Polo claim damages for breach of cll 1.3-1.5 for the years 2014 and 2015, let alone through to 2017, because thereafter the "exclusive right of first refusal" procedure ceases to apply. Pinctada thus has no ongoing obligation to offer to stage the event jointly with Polo, irrespective of who it was that invoked the option procedure in the first place. That is a logical result because cl 1.6 contemplates that the party offering the option may then proceed to hold the event and clearly, if it did, the sequence of consecutive "joint" events would necessarily be broken.
Polo's answer to that difficulty is to submit, in effect, that the terms of cll 1.3 to 1.5 will only cease to bind the parties once an event breaking the sequence of consecutive events has actually occurred and that, since it has not occurred (because Polo did not conduct an event in 2013), Pinctada remained bound by cll 1.3-1.5. (It nevertheless accepts, however, that its damages claim through to 2017 is overstated since, read with cl 1.1, the expression "subsequent years" must be limited to the years up to and including 2015.) That, however, does not readily accord with the language of cl 1.6.
Polo argues that its construction supports the commercial purpose or objects to be secured by the contract, noting that the uncontroversial evidence was that it was an experienced promoter and organiser of polo events around Australia since 2008 and that the business model used was that of Polo. It is submitted that the clear purpose behind cll 1.3-1.6 was that Polo's reputation and business model would be protected such that it could not be excluded from running a beach polo event unless it made a positive election to cease its involvement. In the context of that submission, it was said that the relevant clauses (1.3-1.6) were intended to operate not as a restraint but as a positive inclusion of both parties to the event; i.e., neither could be excluded unless it chose to be excluded. Similarly, in oral argument this was referred to as an option rather than a restraint, though that proposition was later withdrawn or at least qualified. One must keep in mind what was pleaded in this regard. The term contended for (at [6]) was an express or implied "restraint term".
The reference to the parties' agreement as to the need to protect their business expertise and model takes the matter no further. This is the obvious purpose behind cl 20 of the Joint Venture Agreement.
Polo argues that the reference in cl 20.5 refers to each of the "restraint obligations imposed by this Agreement" (as compared with the references in cls 20.3, 20.4 and 20.6 to restraints imposed by the "clause") suggests that the parties understood that there were restraints in the agreement beyond those concerning the intellectual property referred to in cl 20. I accept that the change in terminology is curious. However, it does not provide more than weak support for the construction for which Polo contends.
Insofar as Polo has pleaded (at [6]) that cl 1.6 is an express restraint term, that must be rejected. Nowhere does that clause refer to the concept of "exclusive" liberty to conduct the event nor does it provide that the other party is restrained from conducting its own event. Therefore, as her Honour noted, the term pleaded in [6] could only arise by way of implication.
Relevantly, Polo's pleading particularised the implication of such a term as one arising as a matter of business efficacy. Polo has not pointed to anything to suggest that her Honour erred in the application of the BP Refinery test in this regard (whether in respect of the implied term pleaded at [6] or that at [7]).
The high point of Polo's construction argument in this Court, it seems to me, is that, as a matter of construction, one should draw from the words "will be at liberty" in cl 1.6 the corollary that the other party is not at liberty to hold the event in that year (i.e., a "constructional implication"). That would give content to the words "will be at liberty" beyond them simply being confirmatory.
However, the argument for Polo was not put to her Honour on the basis of a constructional implication i.e., that the textual interpretation of cl 1.6 required the conclusion that there was a restraint imposed on Pinctada staging the event in 2013.
Rather, the outline of submissions of Polo at first instance on the separate question contained the following. At [36], it was submitted that to read the contract in a way which gave each of the joint venture partners the right to conduct the next event unilaterally and independently, and without giving the other partner the opportunity to be involved, rendered the clause meaningless and gave the joint venture, or the parties, no benefit or right in respect of future events; which was said to be against common sense.
At [39], it was submitted: Therefore on the proper construction of the Clause, and where PEA [Polo] has served notice on PHR [Pinctada] but it has not taken up that option: (a) PEA [Polo] has the exclusive right to hold the event the subject of the notice (ie the 2013 event); (b) PHR [Pinctada] has no right to hold the 2013 event and is not permitted to do so.
In the alternative it was submitted at [40] that, by Pinctada failing to give notice of intention to conduct the event pursuant to cl 1.4 it had no right to hold the 2013 event and would be prevailed from so doing.
The submissions at [39]-[40] go no further than to state the construction for which Polo contended.
Again, in reply submissions at [5] Polo submitted that the unduly wide construction of the last words of cl 1.6 renders meaningless the liberty which the other party is given to conduct the next event and would involve replacing the words "other party" with "each party" or to remove the words "the other party will have liberty appropriate" completely.
While, on a charitable reading, a constructional implication argument might be said to have been in some way subsumed in the above submissions, it was not clearly articulated as such; rather, the debate seems to have been as to the business efficacy of the agreement if the clause were not interpreted as Polo contended.
It may readily be accepted that the drafting of the Joint Venture Agreement was infelicitous in a number of respects. Her Honour's construction gave it a workable operation and has not been shown to be more than arguably wrong, if that, and then only in relation to the 2013 year. In the circumstances referred to earlier, this does not warrant the grant of leave to appeal and it is not necessary to express a concluded view on the constructional implication issue raised in the course of argument in this Court.

Conclusion

I would make the following orders: 1. Grant an extension of time for the filing of the summons, insofar as the summons seeks leave to appeal from the decision of Bergin CJ in Eq of 10 December 2012, to 13 July 2015. 2. Dismiss the summons seeking leave to appeal with costs.
TOBIAS AJA: I agree with Ward JA.

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Judgment

BATHURST CJ: I agree with Ward JA and with her Honour's reasons.
WARD JA: Polo Enterprises Australia Pty Limited (Polo) seeks leave to appeal from two decisions in the Equity Division of the Supreme Court. The first is a decision of Bergin CJ in Eq in December 2012 (Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd [2012] NSWSC 1518) in which her Honour dismissed with costs an application by Polo for a permanent injunction to restrain the first respondent, Pinctada Hotels and Resorts Pty Limited (Pinctada), from staging, in 2013, a beach polo event in or within 50km of Broome. The second is a decision of Rein J in June 2015 (Polo Enterprises Australia Pty Ltd ABN 30117622 v Pinctada Hotels and Resorts Pty Ltd [2015] NSWSC 756) in which his Honour gave a procedural ruling that Polo was bound by way of issue estoppel in respect of her Honour's findings as to the construction of the parties' joint venture agreement and ought not be permitted to seek relief in respect of a claimed breach of cl 1.6 of that agreement.
In its written submissions in this Court, Polo did not concede that it was required to seek leave in respect of an appeal from either of those decisions and indicated that it had filed its summons for leave to appeal in respect of both decisions, and for an extension of time with respect to the first of the decisions, in the event that it were to be wrong in its contention that leave to appeal was not required. Nevertheless, in oral submissions Polo did not argue that leave was not necessary. Rather, its argument was that leave to appeal (and the necessary extension of time for the filing of its summons) should be granted. Pinctada maintains that leave to appeal is required in respect of both decisions and opposes the grant of leave.

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